Banks forfeit GH¢102m 2020 profit

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Deputy Chief Executive Officer of the Ghana Association of Bankers, John Awuah

The Ghana Association of Bankers (GAB) has estimated that about GH¢102million has been forfeited by commercial banks in the country through various measures they have introduced to give some relief for customers due to impact of Coronavirus pandemic on the country.

According to the association, all 23 universal banks in the country in one way or another have restructured, re-profiled or granted debt repayment extension to customers – costing them their profit estimates for the year 2020.

“Banks have reduced their interest rate from between 150 to 350 basis points. The lost income in this reduction of interest rate for 2020 alone is about GH¢102million, which is money that could have come as profit to the banks.

“Because of the measures the regulator took in reducing the cash reserve requirement, which has given us a leeway with the cost of funds, we should therefore be able to pass on the benefit to customers. This is why I say that it has resulted in money going into the pockets of our customers,” the Deputy Chief Executive Officer of the Ghana Association of Bankers, John Awuah, told the B&FT in an interview.

He added that commercial banks have positioned themselves to do all in their power to support the economy to come out of the Coronavirus pandemic stronger, by instituting deliberate measures to relieve customers.

“In crisis, you have one or two things to do as a business leader: either contribute to the crisis or be one of the solutions to the crisis. A crisis is not the time to squeeze customers, but rather the time to let the customer know that you are empathetic. If the client’s cash flow is suppressed and depressed, it is not the time to impose an interest rate of 25 percent when you know that it can potentially affect the customer’s ability to pay you.

“The decisions banks have taken is that, as long as it does not take us to an extremely disadvantageous point, we are willing to take a cut in what should have come to us – so that you can still stay in business and be a good customer to us. If the customer is a borrowing customer, you will find out that their ability to re-pay you is enhanced because their interest burden has gone done,” Mr. Awuah said.

Meanwhile, banks in the country have stressed that they are ready to finance projects and programmes in the private and public sectors with the potential to revive the economy irrespective of COVID-19 prevalence.

To Mr. Awuah, the business environment would have supported the banks to take a hard credit stance and hold onto the disbursement of loans, but that could be very detrimental to the economy.

“As projects come we will review them; we will factor in COVID-19 considerations, but if they are bankable and doable why say ‘no’ because of COVID-19? Banks will not recklessly lend, but also won’t close their taps to good projects. They are cautiously lending to support the economy.”

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